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October 27, 2009
Shared Value—The Future of Corporate Philanthropy
I had lunch today with Charles Moore, President of the Committee Encouraging Corporate Philanthropy. It is the tenth anniversary of the CECP, which was founded by the late actor Paul Newman, John Whitehead, former CEO of Goldman Sachs, and real estate magnate Peter Malkin. Today there are 150 members, from GE to Time Warner to GlaxoSmithKline.
Moore described the changed mindset of corporate chieftains about corporate philanthropy, namely “companies are merging business strategy with social strategy, with a goal of maximizing profit. The new mantra is Shared Value.”
Moore stated that companies embracing Shared Value are no longer content to make donations to non-profits. “Companies will sub-contract the implementation of Shared Value programs to non-governmental organizations but will retain the general contractor role for themselves.” Therefore the non-profit sector must adapt from complete programmatic control supported by philanthropy to partnership with private sector with tangible outcomes.
“The smart enterprise will go into the community to find relevant issues, then will do a test phase. The evaluation will be based on Outputs (e.g.--how many bed nets are distributed to fight malaria) and Outcomes (did the incidence of malaria drop in test markets and was the program run in efficient manner). Moore cited statistics from CECP, whose members spend 38% of total dollars in strategic corporate philanthropy, 10% in cause related marketing and 50% in reactive charitable donations linked to executive membership on boards or community requests.
The role of the Chief Giving Officer, often the director of the corporate foundation, will likely evolve, given the new demands for programs where “green is green.” Moore praised a GE effort to build health clinics in four African nations, using its power and medical equipment. He suggested that every annual report should have a section on Shared Value, not be relegated to the annual corporate social responsibility report. The programs must also “make sense to the employees. The employee must be able to connect to the values of the company.”
The concept of Shared Value squares with the demand for Mutual Social Responsibility pointed up in the Edelman goodpurpose Study of 6,000 people in 10 countries released this week.
We found that social purpose is the new status symbol, with:
- 66% said that it is not enough for business to give money for causes; they want CSR ingrained in the business operations.
- 54% said they would prefer a job in a company that gives back to society above a job that offers more annual income.
- 67% said they would switch brands if the competitor supported a cause
- 67% said they were more likely to trust a company that addresses social concerns
- 67% prefer a hybrid over a luxury car
- 83% would be willing to change their consumption if it helped make the world a better place to live
- 56% believe the interests of society and the interests of businesses should have equal weight in business decisions
We are in an Age of Immediate Justification, replacing the Age of Immediate Gratification.
Posted by Edelman at October 27, 2009 6:08 PM |
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Comments
Richard - very interesting topic here with several great takeaways.
You've highlighted this topic at a macro-level, mentioning global enterprises such as GE, Goldman Sachs and Time Warner. My curiosity peaks in how corporate philanthropy and the emerging "Shared Value mantra" lives at a micro-level, small business scale. Of course, Fortune 500 enterprises (such as those mentioned in this post) have incredible resources driving both a substantial and measurable Output and Outcome. However, what application can be applied from the perspective of a small business? As PR agents, should we make a point to encourage our clients of this Shared Value notion, while being sure to practice what we preach? I'd would say yes, especially to the latter.
I think the lesson to be learned here is that there must be a goal - as in any successful PR/business campaign - regardless of the corporate philanthropic reach. After all, the SBA recently reported that small businesses encompass more than half of the private sector employees.
The potential reach to do good is pretty incredible, wouldn't you say? More importantly, for those in the very early stages of their career, like myself, we must be aware of how we can accept responsibility and help drive this notion of accountability.
Great lessons to be learned at any level though, Richard.
Posted by: Steve Mnich at October 28, 2009 5:26 AM